EDITORIAL | Rafale: CAG report ducks, hides much

The much-awaited report of the Comptroller and Auditor-General (CAG) on the Rafale fighter aircraft deal does not answer many of the troubling questions in the public domain about the deal. Worse, it gives misleading answers to some of them. The report completely evades crucial issues, such as the one regarding the offset contract, given to an Anil Ambani company. Apart from the pricing of the aircraft, the offset partnership is at the core of the controversy over the revised deal entered into by the Modi government for the purchase of 36 aircraft from France’s Dassault Aviation. The bypassing of procedures, the excessive interest of the Prime Minister’s Office in the deal and the changes made by the Modi government in the terms of the deal and even in the Defence Procurement Policy itself cannot be explained without reference to the offset factor. A report that leaves out that crucial part is useless in the pursuit of truth, and therefore convenient for the government.

The CAG’s claim on the price of the aircraft and the assumed gains made in the new deal are not convincing. In the first place, it does not give the pricing numbers, taking the government’s line on the issue, but redacts the prices of the aircraft and its associated components. It speaks in percentages which are unconvincing. The 2.86% gain in the aircraft price claimed by the CAG is at variance with the taller claims made by the government. More importantly, this assumed gain would disappear if the absence of sovereign and bank guarantees and the unclear nature of the cost of ‘India-specific enhancements’ are taken into consideration. As we know now, the cost of these enhancements was not negotiated, but was arbitrarily set by Dassault. So, any saving in that regard cannot be considered real. There is no credible explanation why the requirement for guarantees in this important and expensive deal was waived, as also why the number of aircraft to be purchased was changed. This itself was a reason for price escalation, as noted in a dissenting note of three members of the Indian Negotiating Team. There are no answers in the CAG report for the questions raised by them.

There is also no answer to the question why the offer of a lower price made by the manufacturers of another shortlisted aircraft, the Eurofighter, was neither considered nor used to bargain for a better price. Conveniently, the government tabled even this incomplete CAG report only on the last day of the last session of Parliament to avoid discussion over it in the House. All that the government has to do now is to brazen it out against demands for a Joint Parliamentary Committee probe for a few weeks until elections. But the battle over the Rafale deal will continue, and will perhaps get worse after this report.